EB, Submarine-parts Makers Take Their Case For Funding To Capitol Hill

By Jennifer McDermott

The Day

March 6, 2013

Washington — The leaders of companies from across the country that make parts for submarines went to Capitol Hill Wednesday to ask Congress to continue paying for two submarines a year.

Among all of the budget cuts, they said, canceling the order for a second Virginia-class submarine in 2014 would hurt their companies the most. The Navy has said it likely would not purchase that submarine if Congress doesn’t pass a budget this fiscal year.

The House of Representatives voted Wednesday to fund the federal government through the end of the year at last year’s spending levels to avoid a government shutdown later this month when the current continuing resolution expires. The bill includes exceptions for defense and veterans programs and continues the two-per-year submarine production rate.

U.S. Rep. Joe Courtney, D-2nd District, said it “protects not just our national security strategy but also thousands of jobs across our region that rely on stability in our submarine industrial base.”

But James C. Stouch, vice president for business development and sales at Precision Custom Components LLC in York, Pa., said while the vote is “a positive step,” the submarine suppliers aren’t celebrating yet since the Senate still has to agree to the plan.

At his 270-person company, Stouch said, “It’s hard to plan and hard to sustain with this level of uncertainty.”

About 170 companies — from the large shipyards to those with fewer than 30 employees — came from more than 30 states to attend the annual Submarine Industrial Base Council Supplier Days.

“The key message is the need for continuity in the Virginia program as well as any associated programs, including maintenance and modernization. That will have the most immediate impact to Electric Boat,” EB President Kevin J. Poitras said in an interview.

EB in Groton is facing the possible postponement or cancellation of contracts to repair two submarines. The second submarine in 2014 represents 10 million man-hours of work over five years, Poitras said, and it’s important to continue moving forward with a concept to boost firepower on the submarines and with a new ballistic-missile submarine design.

“We were at low-rate production since the mid-90s, really. Now we’re starting to climb up. We need to keep that momentum and not have a setback,” Poitras said. “We have a lot of support to go do that, and we’ll see what happens, but I’m optimistic.”

He said he doesn’t foresee making any significant staffing adjustments.

Cuts to hit defense hard

The executives — many from Connecticut — mingled with members of Congress, who addressed the group at a breakfast, then fanned out to visit their representatives’ offices. The automatic spending cuts under sequestration were a hot topic of conversation since half the cuts are slated to come from defense.

“What we do is specialized, and we’ve got to keep this going,” said William D. Berger, the business development manager at Ward Leonard Electric Co. Inc., in Thomaston. “While we all understand the nation is facing budget cuts, it has got to be done intelligently.”

After $85 billion in cuts this year, sequestration requires $109 billion in annual cuts to reach $1.2 trillion in spending reductions over 10 years.

A company in North Branford, Prime Technology, laid off eight of its 68 employees last week because orders for the company’s measurement and display equipment were delayed due to the budget instability.

Advex Corp. in Hampton, Va., stands to lose about 30 percent of its core business, which ultimately would displace roughly the same percentage of workers, said Charles M. Jackson III, the vice president for production. The company’s 160 employees make precision machine components.

And Joseph Loffredo, the general manager at Micro Precision LLC, said he’s moving forward much more cautiously with plans to expand the company’s building in South Windham, buy new equipment and hire people.

Politicians from Connecticut, Rhode Island, Virginia and New York pledged their support for submarine programs at the council’s breakfast. Both Connecticut Sens. Richard Blumenthal and Chris Murphy, and Connecticut Reps. Courtney, Rosa DeLauro and Elizabeth Esty, spoke.

Second submarine is first priority

“I know that you know we are in a tough, tough time right now,” Rep. Tim Bishop, D-N.Y., said. “We’re not necessarily making the best decisions. I am hopeful that, as we go through this process, sanity will prevail.”

Murphy spoke last and was quickly surrounded by Connecticut executives.

Murphy said he would keep his commitment to building two submarines a year.

Later in the day, John Phillips, the marine business development manager for Sargent Aerospace & Defense, told a staffer in the office of Sen. Jeff Flake, R-Ariz., that funding the second submarine in 2014 should be the first priority, followed by funding the program to build a new class of ballistic-missile submarines and the concept for a module with missile tubes to boost firepower on the Virginia-class.

The company, which employs about 300 people in Tucson, Ariz., makes hydraulic valves for submarines. If the Navy buys one submarine in 2014, it would disrupt the supply chain and increase costs, Phillips said.

“It does nothing but cause problems for every manufacturer,” he said. “The unofficial term is, ‘You get whiplash.’”

Despite the uncertainties surrounding the federal budget, many of the suppliers said it is still a good time to be in the submarine business.

“Assuming we get past sequestration and get a deal that is workable for the country as a whole, I believe it is a stable time,” Stouch said. “The need for the ships is there and the performance of the program has been stellar.”

“I’ve been doing this for 45 years,” said George C. Hill Jr., president of Advex, “and I’ve never seen the submarines go away.”